SEBI Eases Algorithmic Trading OTR Penalties
Analysis based on 8 articles · First reported Feb 04, 2026 · Last updated Feb 04, 2026
The market is expected to react positively to the India===Securities and Exchange Board of India's revised OTR framework, as it eases compliance for algorithmic trading and supports liquidity provision by Market makers. This change is anticipated to reduce market congestion and foster fairer trading practices.
The India===Securities and Exchange Board of India (SEBI) has announced modifications to its framework for imposing penalties on trading members for a high order-to-trade ratio (OTR) in algorithmic trading. The revised framework, effective April 6, 2026, exempts a wider range of equity options orders from penalties, specifically those placed within ±40% of the last traded price (LTP) of the premium or ±Rs 20, whichever is higher. Additionally, algorithmic orders placed by designated Market makers as part of their market-making activity will no longer be considered for OTR computation. These changes aim to alleviate compliance burdens, particularly for Market makers, and balance market efficiency with liquidity, following representations from Stock exchanges and recommendations from SEBI's Secondary Market Advisory Committee.
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